Correlation Between ICICI Securities and City Union

Can any of the company-specific risk be diversified away by investing in both ICICI Securities and City Union at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining ICICI Securities and City Union into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ICICI Securities Limited and City Union Bank, you can compare the effects of market volatilities on ICICI Securities and City Union and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in ICICI Securities with a short position of City Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICICI Securities and City Union.

Diversification Opportunities for ICICI Securities and City Union

0.04

Correlation Coefficient

ICICI Securities  City Union

Significant diversification

The 3 months correlation between ICICI and City is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding ICICI Securities Limited and City Union Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Union Bank and ICICI Securities is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on ICICI Securities Limited are associated (or correlated) with City Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Union Bank has no effect on the direction of ICICI Securities i.e., ICICI Securities and City Union go up and down completely randomly.

Pair Corralation between ICICI Securities and City Union

Assuming the 90 days trading horizon ICICI Securities is expected to generate 1.53 times less return on investment than City Union. But when comparing it to its historical volatility, ICICI Securities Limited is 1.6 times less risky than City Union. It trades about 0.05 of its potential returns per unit of risk. City Union Bank is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  17,038  in City Union Bank on August 31, 2024 and sell it today you would earn a total of  930.00  from holding City Union Bank or generate 5.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

ICICI Securities Limited  vs.  City Union Bank

ICICI Securities

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ICICI Securities Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, ICICI Securities is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

City Union Bank

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in City Union Bank are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, City Union may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with ICICI Securities and City Union

The main advantage of trading using opposite ICICI Securities and City Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICICI Securities position performs unexpectedly, City Union can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in City Union will offset losses from the drop in City Union's long position.

The idea behind ICICI Securities Limited and City Union Bank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.